2022 ESG Report Introduction ESG at Manulife Environmental Climate Action Plan Our Operations Our Investments Our Products and Services Climate-related Risks and Opportunities Nature and Biodiversity Social Governance Performance Data Abbreviations and Acronyms Ecosystem Services Market Consortium During the year, Manulife Investment Management joined the Ecosystem Services Market Consortium (ESMC) and partnered with ESMC as well as the U.S. Cotton Trust Protocol and Forum for the Future to launch the ‘Eco-Harvest’ pilot project in Alabama, Arkansas, Texas, and Tennessee. The project will work with cotton farmers, including some of our own tenants, to generate high quality carbon credits for corporate buyers. World Economic Forum’s Trillion Trees initiative Manulife partnered with 1t.org and the World Economic Forum’s Trillion Trees initiative to provide nature-based solutions to mitigate climate change and partner to scale financial investments, and preserve the social and environmental benefits of forests, agriculture, and biodiversity. We have pledged to conserve and restore trees and forest landscapes both directly through sustainable forest management, reforestation, assisted natural regeneration, and permanent conservation, as well as indirectly through nursery and seedling development, education and capacity building, and data collection and technology tools. Mapping and Measuring In 2022, we began the process of mapping the decarbonization levers at our disposal for timberland and agriculture, as well as piloting new technologies designed to reduce emissions. We will continue this mapping and piloting process over the course of 2023 with the intent to meaningfully reduce our emissions as soon as practicable. We anticipate this could mean taking steps such as using fertilizers with N-inhibitors, electrifying our fleets, fuel switching to renewable energy, and installing more energy-efficient equipment, where possible. Within the nature space, setting targets is challenging because it requires good baseline data and the ability to measure factors, such as biodiversity, that have historically been difficult to measure. For this reason, our current nature targets are mostly process-oriented and focused on establishing the kind of process and measurement protocols required for monitoring current state and progress. Natural capital accounting represents a key component of our approach. During the year, we worked with a leading global consultancy in environmental economics to pilot a natural capital accounting approach for our timberland investments. Forests and farms are natural climate solutions, and carbon sequestration represents a key opportunity for these asset classes. With increasing scrutiny on carbon credits, we released our carbon principles: a high-integrity climate benefit methodology 47 . We have integrated this set of carbon principles into our screening and due-diligence processes for existing carbon projects, as well as our new carbon project development processes, and we will continue to apply it on an ongoing basis. These standards are aligned with The Integrity Council for the Voluntary Carbon Market’s (IC-VCM) core carbon principles and include key principles of additionality, permanence, leakage and accurate monitoring, reporting, and verification, among others. This methodology also provides investors with a framework to choose the portion of annual estimated carbon credit issuance that is sold into offset markets or transferred as in-kind carbon credit issuances. To ensure alignment, our carbon standards working group will recommend moving forward with a new opportunity if the project adheres to these principles. In 2022, we made the following enhancements to our approach: • We added further upgrades to our sustainable investment due diligence process through expansion of our proprietary ‘Sustainability Toolkit’ to include a quantitative scoring component that can be fed directly into our underwriting models. • We invested in a third-party analytical platform, following a thorough due diligence process, that will enable us to systematically evaluate climate risks under various scenarios across all our major investment regions. • We are in the process of rolling out light detection and ranging (LIDAR) mapping across our managed properties to increase the accuracy of our data collection. Real Estate We continue to advance sustainability initiatives in real estate for investments, operations, asset management, and new developments. As part of our due diligence and investment process, we assess environmental risks such as contamination, natural hazards, health and safety, building sustainability performance, and physical climate risks. ESG factors such as environmental risks, energy and water consumption, waste diversion, and greenhouse gases are tracked for our investment selections and contribute to operational reduction targets. In 2022, we made the following enhancements to our approach: • Updated our proprietary Sustainable Building Standards to adapt to industry changes and ensure continuous improvement across our global portfolio, resulting in three primary focus areas: Environmental Impact and Nature, Climate Change, and People and Communities. This reprioritization orients itself with Manulife’s Impact Agenda while maintaining alignment to Manulife Investment Management’s Real Estate Sustainability Framework 45 . In 2023, the updated Standards will be rolled out to the global portfolio to enable a focus on performance and industry priorities. • We advanced our approach to GHG management, which included the roll-out of our proprietary GHG Management Workbook and conducting net zero carbon transition plans by external parties at select priority assets in our portfolio. To better understand our full impact, we undertook an initiative to inventory our scope 3 GHG emissions. 47 For additional information regarding Manulife Investment Management’s ESG investment capabilities for institutional investors only, please visit www.manulifeim.institutional/sustainability . 32